CME Group Misses Expectations

Tags: CME
6 Feb 3:08am
Posted by ZacksResearch
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CME Group Inc. (CME) reported fourth quarter earnings of $3.37 per share, missing the Zacks Consensus Estimate of $3.44. However, including an impairment charge on investment in DME of $24 million and net favorable impacts to net income of $2 million related to the ERP settlement, GAAP diluted earnings were $3.04 per share for the quarter.

 

Management continues to focus on strict expense control through various cost-cutting initiatives. Total operating expenses including NYMEX holdings consolidation decreased by 3.3% in the fourth quarter to $265 million, on year-over-year basis. As a result of expense control, net income increased by 227% to $203 million from $62 million in the prior-year quarter. However, excluding the results of NYMEX consolidation, non-GAAP net income decreased by 6% to $225 million from $239 million in the prior-year period. 



After including the results from NYMEX holdings for both the comparable year-over-year periods, total revenue was $667 million, down 4% from $692 million in the prior-year quarter. The decline in revenues in the reported quarter was primarily attributable to an overall decline in trading volumes. 



CME Group’s average daily volume was 10.2 million contracts, down 1% from fourth quarter 2008. Clearing and transaction fee revenue was $557 million, down 3% from $573 million in fourth-quarter 2008. The total average rate per contract for CME Group decreased 2% to 85 cents from fourth-quarter 2008. 



Quotation data fees were down 6% to $82 million in the reported quarter due primarily to a decrease in screen count associated with cost-cutting initiatives at customer firms. However, access and communication fees decreased 2.6% year-over-year to $11.1 million. 



For full year 2009, CME Group’s operating net income was $885 million or $13.29 per share as compared to $1.08 billion or $16.16 per share in 2008. GAAP net income was $826 million or $12.41 per share as compared to $715 million or $12.13 per share in 2008. After including the results from NYMEX holdings for both the comparable year-over-year periods, total revenue was $2.61 billion, up 2% from $2.56 billion in the prior-year quarter. 



As of Dec 31, 2009, CME Group had $303 million of cash and marketable securities and $2.3 billion of debt. During the quarter, the company paid down approximately $225 million of debt. 



Dividend Update 



On Feb 4, 2009, the Board of CME Group declared a first-quarter dividend of $1.15 per share, payable on Mar 25, 2010, to shareholders of record as on Mar 10, 2010.
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